CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended June 30, 2005

Transcription

1 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended June 30, 2005 Unaudited Unaudited 30/06/ /06/2004 Note HK$ Million HK$ Million (restated) Turnover 2 6,179 5,739 Direct costs and operating expenses (2,089) (1,975 ) Selling and marketing expenses (290) (271 ) Administrative and corporate expenses (285) (280 ) Operating profit before depreciation, amortisation, interest and tax 3,515 3,213 Depreciation and amortisation (607) (710 ) Operating profit before increase in fair value of investment properties 2 2,908 2,503 Increase in fair value of investment properties 8,691 Operating profit after increase in fair value of investment properties 11,599 2,503 Borrowing costs 3 (180) (131 ) Share of profits less losses of associates Share of losses of a jointly controlled entity (7) Profit before taxation 11,514 2,506 Taxation 5(d) (2,027) (453 ) Profit for the period 9,487 2,053 Attributable to: Shareholders 9,035 1,668 Minority interests ,487 2,053 Interim dividend declared after the balance sheet date Earnings per share Basic 7 HK$3.69 HK$0.68 Diluted 7 HK$3.69 HK$0.68 Interim dividend per share cents cents 14 The Wharf (Holdings) Limited Interim Report 2005

2 CONSOLIDATED BALANCE SHEET As at June 30, 2005 Unaudited Audited 30/06/ /12/2004 Note HK$ Million HK$ Million (restated) Non-current assets Fixed assets Investment properties 75,043 66,262 Other properties, plant and equipment 11,090 11,186 86,133 77,448 Leasehold lands 1,452 1,468 Goodwill Long term deposits Interest in associates 1,517 1,583 Interest in a jointly controlled entity Available for sale investments 1,668 1,654 Long term receivables Programming library Defined benefit pension scheme assets Deferred tax assets Financial derivative assets ,378 83,656 Current assets Inventories 3,084 3,025 Trade and other receivables 8 1,013 1,248 Financial derivative assets 12 Deposits and cash 2,151 2,209 6,260 6,482 Current liabilities Trade and other payables 9 (3,906) (4,618 ) Short term loans and overdrafts (2,174) (3,236 ) Taxation payable (984) (750 ) (7,064) (8,604 ) Net current liabilities (804) (2,122 ) Total assets less current liabilities 91,574 81,534 The Wharf (Holdings) Limited Interim Report

3 CONSOLIDATED BALANCE SHEET (continued) As at June 30, 2005 Unaudited Audited 30/06/ /12/2004 Note HK$ Million HK$ Million (restated) Non-current liabilities Long term loans (13,765) (13,206 ) Deferred taxation (11,069) (9,447 ) Other deferred liabilities (257) (257 ) Financial derivative liabilities (5) (25,096) (22,910 ) NET ASSETS 66,478 58,624 Capital and reserves Share capital 10 2,447 2,447 Reserves 11 60,364 52,502 Shareholders equity 62,811 54,949 Minority interests 3,667 3,675 TOTAL EQUITY 66,478 58, The Wharf (Holdings) Limited Interim Report 2005

4 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended June 30, 2005 Unaudited Unaudited 30/06/ /06/2004 HK$ Million HK$ Million (restated) Total equity as at January 1 as previously restated Shareholders equity 65,168 51,628 Minority interests (previously presented separately from liabilities and equity at December 31) 4,355 4,021 69,523 55,649 Prior year adjustment arising from changes in accounting policies (Note 1): (10,899) (8,680 ) Total equity as restated 58,624 46,969 Net losses not recognised in the consolidated profit and loss account (463) (81 ) Investments revaluation reserves transferred to the profit and loss account on disposal of non-trading investments (2) (22 ) Profit for the period as previously stated 2,070 Prior year adjustment for hotel properties (Note 1c) (17 ) Profit for the period (2004: as restated) 9,487 2,053 Total recognised gain for the period Shareholders equity 8,743 1,575 Minority interests ,022 1,950 Final dividend approved in respect of previous year (881) (685 ) Dividend to minority interests (287) (378 ) Total equity as at June 30 66,478 47,856 Attributable to: Shareholders equity 62,811 44,446 Minority interests 3,667 3,410 66,478 47,856 The Wharf (Holdings) Limited Interim Report

5 CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended June 30, 2005 Unaudited Unaudited 30/06/ /06/2004 HK$ Million HK$ Million Net cash inflow from operating activities 2,752 2,631 Net cash (outflow)/inflow relating to investing activities (1,052) 25 Net cash outflow from financing activities (1,758) (2,145 ) (Decrease)/increase in cash and cash equivalents (58) 511 Cash and cash equivalents at January 1 2,209 1,512 Cash and cash equivalents at June 30 2,151 2,023 Analysis of the balance of cash and cash equivalents Deposits and cash 2,151 2, The Wharf (Holdings) Limited Interim Report 2005

6 NOTES TO THE ACCOUNTS 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION The unaudited interim consolidated accounts have been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and applicable disclosable provisions of Appendix 16 of Listing Rules of The Stock Exchange of Hong Kong Limited. The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. The accounting policies and methods of computation used in the preparation of the interim accounts are consistent with those described in the annual accounts for the year ended December 31, 2004 except for those changes following the Group s adoption of the new and revised Hong Kong Financial Reporting Standards ( HKFRS ), including HKASs and relevant Interpretations ( HKAS-INTs and HK-INTs ) which took effect on January 1, The changes in accounting policies, which have significant impacts on the Group s accounts are summarised as follows: a. HKAS 40 Investment property In prior years, investment properties other than those with unexpired lease term of 20 years or less were stated at fair value. Changes in the value of investment properties were dealt with as movements in the investment properties revaluation reserves. Deficits arising on revaluation on a portfolio basis were set off against previous revaluation surpluses and thereafter charged to the profit and loss account. Investment properties with unexpired lease term of 20 years or less were stated at carrying value less accumulated depreciation and impairment provision, if any. With effect from January 1, 2005, upon the adoption of HKAS 40, all the Group s investment properties, including those with unexpired lease term of 20 years or less, are stated at fair values with all the changes in fair value recognised directly in the consolidated profit and loss account. This new accounting policy has been applied retrospectively. Revenue reserves as at January 1, 2005 and January 1, 2004 were increased by HK$42,870 million and HK$32,109 million respectively, representing the transfers of accumulated attributable revaluation surplus previously recorded in the investment properties revaluation reserves. The shareholders equity as at January 1, 2005 increased by HK$11 million, because of an adjustment for restating certain investment properties with unexpired lease term of 20 years or less at fair value under HKAS 40. The effect of the change has increased the profit attributable to shareholders and minority interests for the period ended June 30, 2005 by HK$8,647 million and HK$44 million, respectively. This change has no impact in the Group s results for the period ended June 30, 2004 as no revaluation of the Group s investment properties was done at June 30, b. HKAS-INT 21 Income taxes recovery of revalued non-depreciable assets In previous years, deferred taxation was recognised on revaluation changes of the Group s investment properties on the basis that the recovery of the carrying amount of the investment properties would be through sales and no deferred taxation was provided on the revaluation changes of the properties located in Hong Kong, as the capital gain tax rate was nil. The Wharf (Holdings) Limited Interim Report

7 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) b. HKAS-INT 21 Income taxes recovery of revalued non-depreciable assets (continued) With effect from January 1, 2005, HKAS-INT 21 required deferred taxation to be recognised on any revaluation changes on investment properties on the basis that the recovery of the carrying amount of the investment properties would be through use and calculated at the applicable profits tax rate and charged to profit and loss account. This new accounting policy has been applied retrospectively. Shareholders equity as at January 1, 2005 and January 1, 2004 had been restated and decreased by HK$7,380 million and HK$5,545 million respectively whereas minority interest as at January 1, 2005 and January 1, 2004 had been restated and decreased by HK$48 million and HK$39 million respectively. The adjustment represented deferred tax liabilities of the revaluation of the Group s investment properties. As a result of this change, deferred tax charge for the period ended June 30, 2005 increased by HK$1,544 million. This change has no impact on the Group s results for the period ended June 30, 2004 as no revaluation of the Group s investment properties was done at June 30, c. HK-INT 2 The appropriate accounting policies for hotel properties In prior years, the Group s hotel and club properties were stated at their open market value based on an annual professional valuation. No depreciation was provided on hotel and club properties with 20 years or more as they were maintained in continuous state of sound repair and given the estimated life of the hotel properties and their residual values, any depreciation would be immaterial. With effect from January 1, 2005, upon the adoption of HK-INT 2, hotel and club properties are stated at cost less accumulated depreciation and impairment provision. The effect of adopting the new accounting policy has been applied retrospectively. Shareholders equity as at January 1, 2005 and January 1, 2004 were restated and decreased by HK$2,850 million and HK$2,527 million respectively whereas minority interest as at January 1, 2005 and January 1, 2004 were restated and decreased by HK$632 million and HK$569 million respectively. The change has increased depreciation charge and reduced the profit attributable to shareholders and minority interests for the period ended June 30, 2005 by HK$12 million and HK$5 million, respectively (Period ended June 30, 2004: HK$12 million and HK$5 million respectively). d. HKAS 17 Leases In prior years, the Group s leasehold land and buildings for own use were accounted for as finance leases and were stated at cost less accumulated depreciation, except for hotel properties which were stated at revalued amounts. With effect from January 1, 2005, upon the adoption of HKAS 17, the Group s leasehold interest in the land held for own use is accounted for as being held under an operating lease where the fair value of the interest in any buildings situated on the leasehold land could be split reliably from the fair value of the leasehold interest in the land at the time the lease was first entered into by the Group, or taken over from the previous lessee, or at the date of construction of those buildings, if later. In case the two elements cannot be allocated reliably, the entire lease is classified as a finance lease and carried at cost less accumulated depreciation. The operating leasehold land will no longer be revalued. Instead, the land premium paid for distinguishable leasehold land is accounted for as an operating lease and amortised on a straight-line basis over its unexpired lease term. The new accounting policy has been applied retrospectively, which has resulted in reclassification of certain leasehold interest in land previously included in fixed assets as leasehold land in the amount of HK$1,468 million as at January 1, 2005 with the comparative restated to conform to the current period s presentation. This change has no significant impact on the Group s results and equity. 20 The Wharf (Holdings) Limited Interim Report 2005

8 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) e. HKFRS 3 Business Combinations In prior years, positive goodwill, being the excess of the cost of a business combination over the net fair value of net assets acquired, arising on or after January 1, 2001 was capitalised and amortised on a straight line basis over the shorter of its useful life and 20 years and was subject to impairment testing when there were indications of impairment, except goodwill which arose prior to January 1, 2001 and written off to capital reserves in accordance with the transitional provisions set out the Statement of Standard Accounting Practice 30 Business combinations. With effect from January 1, 2005, in accordance with HKFRS 3 Business Combinations and HKAS 36 Impairment of Assets, the Group no longer amortises goodwill. Such goodwill is tested annually for impairment, including in the year of its initial recognition, as well as when there are indications of impairment. Impairment losses are recognised when the carrying amount of the cash generating units to which the goodwill has been allocated exceeds its recoverable amount. Negative goodwill, being the fair value of the net assets acquired in a business combination which exceeds the consideration paid, is recognised immediately in the profit and loss account as it arises. This change in accounting policy has been adopted prospectively from January 1, 2005, and the cessation on amortisation of goodwill has increased the Group s profit after taxation for the six months ended June 30, 2005 by HK$25 million. In addition, the Group s negative goodwill of HK$303 million previously credited to other capital reserves has been transferred to revenue reserves. The Group has furthermore transferred goodwill that arose prior to January 1, 2001 and eliminated against other capital reserves totaling HK$3,415 million to revenue reserves since such goodwill is not allowed to be restated in the balance sheet or included in the calculation of the results on disposal of relevant subsidiaries/associates. The net effect of the above transfers has reduced revenue reserve and increased other capital reserves by the same amount of HK$3,112 million without impact on the Group s equity. f. HKAS 32 Financial instruments: Disclosure and Presentation, and HKAS 39 Financial instruments: Recognition and Measurement The application of HKAS 32 and 39 has resulted in a change in accounting policy relating to the classification of financial assets and liabilities and their measurement. The principal effects of the change on the Group are summarised as below: i. Classification and measurement of financial assets and financial liabilities From January 1, 2005 onwards, the Group classifies and measures its financial assets and financial liabilities in accordance with the requirements of HKAS 39. Financial assets under HKAS 39 are classified as financial assets at fair value through profit or loss including trading securities, loans and receivables, held-to-maturity financial assets or available-for-sale financial assets including non-trading investments. Financial assets at fair value through profit or loss are initially recognised and remeasured at fair value through the profit and loss account. Other financial assets are generally measured at amortised cost using the effective interest method. Available-for-sale financial assets are carried at fair value with any unrealised gains and losses recognised in equity. Financial liabilities are generally classified as financial liabilities at fair value through profit or loss and other financial liabilities carried at amortised cost using the effective interest method. The change has resulted in reclassifications of certain financial assets and liabilities together with the corresponding comparatives and has no significant impacts on the Group s results and equity. The Wharf (Holdings) Limited Interim Report

9 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) f. HKAS 32 Financial instruments: Disclosure and Presentation, and HKAS 39 Financial instruments: Recognition and Measurement (continued) ii. Derivatives and hedging From January 1, 2005 onwards, all derivatives are initially recognised at fair value on the date of entering the derivative contract and are subsequently remeasured at fair value at each balance sheet date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and the nature of the item being hedged. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the profit and loss account. In accordance with HKAS 39, there are three types of hedge relationships, including fair value hedges, cash flow hedges and net investment hedges. Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges together with any changes in the fair value of the corresponding hedged asset or liability are recorded in the profit and loss account. Cash flow hedges Changes in the fair value of derivatives held as hedging instruments that are designated and qualify as cash flow hedges are recognised in equity to the extent that the hedge is effective. The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any related cumulative gain or loss existing in equity is recognised in the profit and loss account. When a forecast transaction is no longer expected to occur, the related cumulative gain or loss in equity is immediately transferred to the profit and loss account. Net investment hedges Changes in the fair value of the effective portion of hedging instruments are recognised initially in equity. Changes in the fair value of the ineffective portion of hedging instruments are recognised directly in the profit and loss account. On disposal of a foreign operation, the gain or loss on the hedging instrument remaining in equity will be transferred to the profit and loss account for the period in which the disposal takes place. At December 31, 2004, the Group s derivative financial instruments, mainly comprising interest rate and currency swaps, were used to manage the Group s exposure to interest rate and foreign exchange rate fluctuation. The notional amounts of derivatives were previously recorded off balance sheet. Interest flows arising on the derivatives were previously accounted for on an accrual basis. 22 The Wharf (Holdings) Limited Interim Report 2005

10 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) f. HKAS 32 Financial instruments: Disclosure and Presentation, and HKAS 39 Financial instruments: Recognition and Measurement (continued) ii. Derivatives and hedging (continued) The Group has applied the relevant transitional provisions of HKAS 39 and adopted hedge accounting in accordance with the standard with effect from January 1, 2005 onwards. As a result of the change, the fair values of the Group s financial derivative assets totalling HK$113 million (comprising non-current assets of HK$101 million and current assets of HK$12 million) and non-current financial derivative liabilities totalling HK$5 million have been recognised, whereas the hedged borrowings have been increased by HK$96 million and are reflected in the balance sheet at June 30, This change has no significant impact in the Group s results and equity. g. Presentational changes The application of the new HKFRSs has also resulted in changes in the presentation of the accounts retrospectively with comparatives restated to conform to the current period s presentation, in particular of below: i. In prior years, minority interests were presented in the consolidated balance sheet separately from liabilities and as a deduction from net assets. Financial results shared by minority interests were separately presented in the consolidated profit and loss account as a deduction before arriving at the profit attributable to shareholders. With effect from January 1, 2005, in order to comply with HKAS 1 Presentation of Financial Statements and HKAS 27 Consolidated and Separate Financial Statements, minority interests are presented in the consolidated balance sheet as an element of total equity, separately from the equity attributable to the shareholders of the Company, and the results shared by minority interests are presented on the face of the consolidated profit and loss account as an allocation of the attributable profit between the minority interests and the shareholders of the Company. ii. In prior years, shares of associates/jointly controlled entities tax was presented as a component of taxation in the profit and loss account. On adoption of the HKAS 1, share of associates/jointly controlled entities tax are presented net of the share of associates/jointly controlled entities profit. The Wharf (Holdings) Limited Interim Report

11 1. PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) h. Summary of the effect of changes in the accounting policies i. Effect on opening balance of total equity at January 1, 2005 and January 1, 2004 (as adjusted) Shareholders equity Revenue Other Minority Total reserves reserves Total interests equity HK$ HK$ HK$ HK$ HK$ Million Million Million Million Million At January 1, 2005 Prior year adjustment HKAS 40 42,881 (42,870) HKAS-INT 21 (7,380) (7,380) (48) (7,428) HK-INT 2 (221) (2,629) (2,850) (632) (3,482) 35,280 (45,499) (10,219) (680) (10,899) Opening adjustment HKFRS 3 (3,112) 3,112 Total increase/(decrease) in equity 32,168 (42,387) (10,219) (680) (10,899) At January 1, 2004 Prior year adjustment HKAS 40 32,109 (32,109) HKAS-INT 21 (5,545) (5,545) (39) (5,584) HK-INT 2 (194) (2,333) (2,527) (569) (3,096) Total increase/(decrease) in equity 26,370 (34,442) (8,072) (608) (8,680) ii. Effect on profit after taxation for the six months ended June 30, 2005 Attributable Minority to shareholders interests Total HK$ Million HK$ Million HK$ Million HKAS 40 8, ,691 HKAS-INT 21 (1,535) (9) (1,544) HK-INT 2 (12) (5) (17) HKFRS Total increase in profit after taxation 7, , The Wharf (Holdings) Limited Interim Report 2005

12 2. TURNOVER AND OPERATING PROFITS a. Segment Information i. Business segments Segment Revenue Segment Results 30/06/ /06/ /06/ /06/2004 HK$ Million HK$ Million HK$ Million HK$ Million (restated) Property investment 2,475 2,241 1,728 1,537 Hong Kong 1,946 1,793 1,561 1,406 China Hotels Communications, media and entertainment ( CME ) 1,990 1, Pay television Internet and multimedia (27) i-cable (before unallocated items) 1,227 1, Telecommunications Others (14) 4 Logistics 1,736 1, Terminals 1,555 1, Others ,201 5,687 2,935 2,591 Property development 4 73 (6) 12 Investment and others Inter-segment revenue (Note) (135) (139) 6,179 5,739 3,012 2,623 Unallocated income and expenses (104) (120) Operating profit before increase in fair value of investment properties 2,908 2,503 Increase in fair value of investment properties 8,691 Operating profit after increase in fair value of investment properties 11,599 2,503 Borrowing costs (180) (131) Associates Property development Terminals Others 2 Jointly controlled entity Terminals (7) Profit before taxation 11,514 2,506 The Wharf (Holdings) Limited Interim Report

13 2. TURNOVER AND OPERATING PROFITS (continued) a. Segment Information (continued) i. Business segments (continued) Note: Inter-segment revenue eliminated on consolidation included: 30/06/ /06/2004 HK$ Million HK$ Million Property investment CME Logistics 1 Investment and others ii. Geographical segments During the period, more than 90 per cent of the operations of the Group in terms of the above items was in Hong Kong. b. Operating profit is arrived at after: 30/06/ /06/2004 HK$ Million HK$ Million (restated) Charging: Depreciation assets held for use under operating leases other assets Amortisation of prepaid expenses, programming library and leasehold lands Amortisation of goodwill 25 Total depreciation and amortisation Staff costs, including retirement scheme costs HK$43 million (2004: HK$38 million) 1,086 1,048 Auditors remuneration Audit services 4 4 Other services 1 1 Cost of properties sold during the period 3 53 And crediting: Rental income less direct outgoings, including contingent rentals HK$100 million (2004: HK$73 million) 1,697 1,517 Interest income Dividend income from listed investments Dividend income from unlisted investments The Wharf (Holdings) Limited Interim Report 2005

14 3. BORROWING COSTS 30/06/ /06/2004 HK$ Million HK$ Million Interest on: Bank loans and overdrafts Other loans repayable within five years Other loans repayable over five years 7 Other borrowing costs (8) Less: Amount capitalised (6) (12) Net borrowing costs for the period The Group s average borrowing cost for the period was 2.6% per annum (2004: 1.6% per annum). 4. SHARE OF PROFITS LESS LOSSES OF ASSOCIATES Share of profits of associates mainly included attributable profits on disposal of Sorrento and Bellagio residential units and terminals operation. 5. TAXATION a. The provision for Hong Kong profits tax is based on the profit for the period as adjusted for tax purposes at the rate of 17.5% (2004: 17.5%). b. Overseas taxation is calculated at rates of tax applicable in countries in which the Group is assessed for tax. c. Tax underprovision in respect of prior years is principally attributable to the deductibility of certain interest expenses was under dispute with the Inland Revenue Department. The Wharf (Holdings) Limited Interim Report

15 5. TAXATION (continued) d. Taxation in the consolidated profit and loss account represents: 30/06/ /06/2004 HK$ Million HK$ Million Current tax Hong Kong profits tax Underprovision in respect of prior years (note c) Overseas taxation 1 1 Overprovision in respect of prior years (9) 1 (8) Deferred tax Change in value of investment properties 1,544 Origination and reversal of temporary differences , , e. None of the taxation payable in the balance sheet is expected to be settled after more than one year. f. Share of associates tax for the six months ended June 30, 2005 of HK$4 million (2004: HK$12 million) is included in the share of profits less losses of associates. 6. DIVIDENDS a. Dividends attributable to the period 30/06/ /06/2004 HK$ Million HK$ Million Proposed after the balance sheet date: 36 cents (2004: cents) per share The above interim dividends were proposed after the balance sheet dates and have not been recognised as liabilities at the respective balance sheet dates. 28 The Wharf (Holdings) Limited Interim Report 2005

16 6. DIVIDENDS (continued) b. Dividends attributable to the previous financial year but approved during the period 30/06/ /06/2004 HK$ Million HK$ Million Final dividend in respect of the previous financial year, approved during the period, of 36 cents (2004: 28 cents) per share EARNINGS PER SHARE The calculation of earnings per share is based on the earnings for the period of HK$9,035 million (2004: HK$1,668 million as restated) and the weighted average of 2,447 million ordinary shares (2004: 2,447 million ordinary shares) in issue during the period. The calculation of diluted earnings per share is based on earnings for the period of HK$9,035 million (2004: HK$1,668 million as restated) and the weighted average of 2,447 million ordinary shares (2004: 2,447 million ordinary shares) after adjusting for the effects of all dilutive potential ordinary shares. The existence of unexercised options during the period ended June 30, 2005 has no dilutive effect on the calculation of diluted earnings per share for the period ended June 30, TRADE AND OTHER RECEIVABLES 30/06/ /12/2004 HK$ Million HK$ Million Trade debtors 0 30 days days days Over 90 days Other debtors ,013 1,248 The Group has a defined credit policy. The general credit terms allowed range from 0 to 60 days, except for pre-sale proceeds of properties under development, which are due to receive upon completion of the properties under development. The Wharf (Holdings) Limited Interim Report

17 9. TRADE AND OTHER PAYABLES 30/06/ /12/2004 HK$ Million HK$ Million Trade creditors 0 30 days days days Over 90 days Other creditors and provisions 3,465 3,971 3,906 4, SHARE CAPITAL 30/06/ /12/2004 No. of share No. of share 30/06/ /12/2004 Million Million HK$ Million HK$ Million Authorised Ordinary shares of HK$1 each 3,600 3,600 3,600 3,600 Issued and fully paid Ordinary shares of HK$1 each 2,447 2,447 2,447 2, The Wharf (Holdings) Limited Interim Report 2005

18 11. CAPITAL AND RESERVES Shareholders equity Investment Capital properties Investment Other Share Share redemption revaluation revaluation capital Revenues Minority Total capital premium reserves reserves reserves reserves reserves Total interest equity HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million HK$ Million a. Company and Subsidiaries Balance at January 1, 2005 as previously reported 2,447 7, , (358) 11,975 65,122 4,355 69,477 Prior year adjustment for (Note 1): Investment properties and related deferred tax (42,870) 35,501 (7,369) (48) (7,417) Hotel and clubs (2,629) (221) (2,850) (632) (3,482) As restated 2,447 7, (2,987) 47,255 54,903 3,675 58,578 Opening adjustment Goodwill (Note 1e) 3,112 (3,112) 2,447 7, ,143 54,903 3,675 58,578 Revaluation deficit non-trading investments (4) (4) (4) Others (138) (148) (286) (173) (459) Profit for the period 8,940 8, ,392 Dividends approved in respect of the previous year (881) (881) (881) Dividend paid to minority interest (287) (287) Balance at June 30, ,447 7, (13) 52,054 62,672 3,667 66,339 b. Associates/Jointly Controlled Entities Balance at January 1, Profit for the period Transfer to profit and loss account on disposal of non-trading investments (2) (2) (2) Balance at June 30, Total reserves At June 30, ,447 7, (13) 52,193 62,811 3,667 66,478 At December 31, 2004 (Restated) 2,447 7, (2,987) 47,299 54,949 3,675 58,624 The Wharf (Holdings) Limited Interim Report

19 12. MATERIAL RELATED PARTY TRANSACTIONS Except for the transactions noted below, the Company and the Group have not been a party to any material related party transactions during the period ended June 30, 2005: a. Loan totalling HK$1,331 million (31/12/2004: HK$1,494 million) advanced by the Group to certain associate involved in the Bellagio property developments project is considered to be related party transactions and also constitute connected transactions as defined under the Listing Rules. Waivers were granted by the Stock Exchange in 1997 and 1994 from complying with the relevant connected transaction requirements. The net interest earned by the Group from these loan during the period is not material in the context of these accounts. b. As disclosed in Note 13(b), the Company and a subsidiary, together with its principal shareholder and two of its subsidiaries, have jointly and severally guaranteed the performance and observance of the terms by a subsidiary of the associate under an agreement to develop the Sorrento property project. Such guarantees given by the Company constitute connected transactions as defined under the Listing Rules, but a waiver from complying with the relevant connected transaction requirements was granted by the Stock Exchange in c. In respect of the period ended June 30, 2005, the Group purchased million shares in i-cable for HK$0.3 billion from two subsidiaries of its principal shareholder. The transactions are considered to be related party transaction and also constitute connected transactions as defined under the Listing Rules. 13. CONTINGENT LIABILITIES As at June 30, 2005: a. There were contingent liabilities in respect of guarantees given by the Company on behalf of subsidiaries relating to overdraft, short term loan and credit facilities, bonds and notes of up to HK$22,142 million (31/12/2004: HK$23,128 million). b. The Company and a subsidiary together with its principal shareholder and two of its subsidiaries thereof, have jointly and severally guaranteed the performance and observance of the terms under an agreement for the Sorrento property development project by the subsidiary of an associate. c. Forward exchange contracts amounting to HK$4,137 million (31/12/2004: HK$4,238 million). 32 The Wharf (Holdings) Limited Interim Report 2005

20 14. COMMITMENTS 30/06/ /12/2004 HK$ Million HK$ Million a. Capital commitments Planned capital expenditure: Authorised and contracted for 1,845 1,931 Authorised but not contracted for 2,577 1,494 4,422 3,425 b. Other commitments Planned expenditure mainly related to properties under development for sale Authorised and contracted for Authorised but not contracted for 1,027 1,497 1,666 1, REVIEW OF UNAUDITED INTERIM ACCOUNTS The unaudited interim accounts for the six months ended June 30, 2005 have been reviewed with no disagreement by the Audit Committee of the Company. The Wharf (Holdings) Limited Interim Report

21 COMPLIANCE WITH THE MODEL CODE FOR DIRECTORS DEALING IN SECURITIES The Company has adopted a code of conduct regarding directors securities transactions on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 of the Listing Rules. The Company has made specific enquiry of all Directors and all the Directors have complied with the required standard set out in the Model Code and its code of conduct regarding Directors securities transactions. DIRECTORS INTERESTS IN SHARES At June 30, 2005, Directors of the Company had the following beneficial interests, all being long positions, in the share capitals of the Company and of two subsidiaries of the Company, namely, i-cable Communications Limited ( i-cable ) and Modern Terminals Limited ( Modern Terminals ), and the percentages which the shares represented to the issued share capitals of the Company, i-cable and Modern Terminals respectively are also set out below: No. of Ordinary Shares (Percentage of Issued Capital) Nature of Interest The Company Mr Gonzaga W J Li 686,549 (0.0281%) Personal interest Mr Stephen T H Ng 650,057 (0.0266%) Personal interest Mr T Y Ng 178,016 (0.0073%) Personal interest i-cable Mr Gonzaga W J Li 68,654 (0.0034%) Personal interest Mr Stephen T H Ng 1,065,005 (0.0527%) Personal interest Mr Erik B Christensen 2,500 (0.0001%) Personal interest Mr T Y Ng 17,801 (0.0009%) Personal interest Modern Terminals Mr Hans Michael Jebsen 3,787 (4.925%) Corporate interest Note: The 3,787 shares regarding Corporate Interest in which Mr Hans Michael Jebsen was taken to be interested as stated above was the interest held by a corporation in general meetings of which Mr Jebsen was either entitled to exercise (or was taken under Part XV of the Securities and Futures Ordinance (the SFO ) to be able to exercise) or control the exercise of one-third or more of the voting power. 34 The Wharf (Holdings) Limited Interim Report 2005

22 Except as disclosed above, as recorded in the register kept by the Company under section 352 of the SFO in respect of information required to be notified to the Company and the Stock Exchange pursuant to the SFO or to the Model Code for Securities Transactions by Directors of Listed Issuers: (i) (ii) there were no interests, both long and short positions, held as at June 30, 2005 by any of the Directors or Chief Executive of the Company in shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO); and there existed during the financial period no rights to subscribe for any shares, underlying shares or debentures of the Company which were held by any of the Directors or Chief Executive of the Company or any of their spouses or children under 18 years of age nor had there been any exercises during the financial period of any such rights by any of them. SUBSTANTIAL SHAREHOLDERS INTERESTS Given below are the names of all parties which were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital of the Company as at June 30, 2005, the respective relevant numbers of shares in which they were, and/or were deemed to be, interested as at that date as recorded in the register kept by the Company under section 336 of the SFO (the Register ) and the percentages which the shares represented to the issued share capital of the Company: Names No. of Ordinary Shares (Percentage of Issued Capital) (i) Lynchpin Limited 171,974,029 (7.03%) (ii) Star Attraction Limited 171,974,029 (7.03%) (iii) Wheelock Properties Limited 173,652,029 (7.10%) (iv) Myers Investments Limited 173,652,029 (7.10%) (v) Wheelock Corporate Services Limited 173,652,029 (7.10%) (vi) WF Investment Partners Limited 1,051,765,051 (42.97%) (vii) Wheelock and Company Limited 1,222,896,080 (49.97%) (viii) HSBC Trustee (Guernsey) Limited 1,222,896,080 (49.97%) (ix) J.P. Morgan Chase & Co. 146,448,525 (5.98%) Notes: (1) For the avoidance of doubt and double counting, it should be noted that duplication occurs in respect of the shareholdings stated against parties (i) to (viii) above to the extent that the shareholding stated against party (i) above was entirely duplicated or included in that against party (ii) above, with the same duplication of the shareholdings in respect of (ii) in (iii), (iii) in (iv), (iv) in (v), (v) in (vi), (vi) in (vii) and (vii) in (viii). (2) Due to the amalgamation of Bermuda Trust (Guernsey) Limited with HSBC Trustee (Guernsey) Limited into one company known as HSBC Trustee (Guernsey) Limited with effect from January 1, 2005, the name of Bermuda Trust (Guernsey) Limited, which appeared in the Register prior to January 1, 2005, has been accordingly amended to become HSBC Trustee (Guernsey) Limited. All the interests stated above represented long positions and as at June 30, 2005, there were no short position interests recorded in the Register. The Wharf (Holdings) Limited Interim Report

23 SHARE OPTION SCHEME Throughout the period under review, there were outstanding certain share options previously granted on August 1, 1996 under the Company s Executive Share Incentive Scheme to 12 employees (being participants with options not exceeding the respective individual limits), all working under employment contracts which are regarded as continuous contracts for the purposes of the Employment Ordinance. Such options were exercisable during the period from August 1, 2005 to July 31, 2006, and on full exercise would require the Company to allot 400,000 new shares to the grantees at an exercise price of HK$25.00 per share. Except as disclosed above, no share option of the Company was issued, exercised, cancelled, lapsed or outstanding throughout the period under review. PURCHASE, SALE OR REDEMPTION OF SHARES Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any listed securities of the Company during the financial period under review. BOOK CLOSURE The Register of Members will be closed from Thursday, October 6, 2005 to Thursday, October 13, 2005, both days inclusive, during which period no transfer of shares of the Company can be registered. In order to qualify for the abovementioned interim dividend, all transfers, accompanied by the relevant share certificates, must be lodged with the Company s Registrars, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, not later than 4:30 p.m. on Wednesday, October 5, By Order of the Board Wilson W S Chan Secretary Hong Kong, August 30, 2005 As at the date of this interim report, the Board of Directors of the Company comprises Mr Peter K C Woo, Mr Gonzaga W J Li, Mr Stephen T H Ng, Mr Erik B Christensen, Mr Quinn Y K Law, Ms Doreen Y F Lee and Mr T Y Ng, together with six independent Non-executive Directors, namely, Mr Paul M P Chan, Professor Edward K Y Chen, Dr Raymond K F Ch ien, Hon Vincent K Fang, Mr Hans Michael Jebsen and Mr James E Thompson. 36 The Wharf (Holdings) Limited Interim Report 2005